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OCC Bulletin 2019-17
April 3, 2019
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Chief Executive Officers of All National Banks, Federal Savings Associations, and Federal Branches and Agencies of Foreign Banking Organizations; Department and Division Heads; All Examining Personnel; and Other Interested Parties
In November 2019, the FASB issued ASU No. 2019-10, "Financial Instruments-Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates." This ASU delayed the effective date of Topic 326 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, for all institutions, except U.S. Securities and Exchange Commission (SEC) filers, as that term is defined in U.S. generally accepted accounting principles, that are not eligible to be smaller reporting companies as defined by the SEC. The responses to the "Frequently Asked Questions" issued on April 3, 2019, have not yet been updated. Institutions should consider this delayed effective date when reviewing the responses to questions 3, 4, 28, and 34 through 36.
The Office of the Comptroller of the Currency (OCC), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the National Credit Union Administration (collectively, the agencies) are publishing additional frequently asked questions (FAQ) to assist financial institutions and examiners with the new accounting standard, Accounting Standards Update (ASU) 2016-13, Topic 326, “Financial Instruments–Credit Losses” (ASU 2016-13), issued by the Financial Accounting Standards Board (FASB) on June 16, 2016. The agencies published 23 FAQs on December 19, 2016, and published 14 additional questions on September 6, 2017. Today, the agencies are publishing nine additional questions, updating responses to four existing questions, and adding an appendix with links to relevant resources that are available to banks to assist with implementation of the current expected credit losses methodology (CECL).
ASU 2016-13 introduces CECL for estimating allowances for credit losses. The effective date of ASU 2016-13 depends on the financial institution’s characteristics. For U.S. Securities and Exchange Commission filers, ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.
This bulletin rescinds the following:
ASU 2016-13 and the supervisory views outlined in the FAQs apply to all national banks, federal savings associations, and federal branches and agencies of foreign banking organizations.
The nine additional FAQs address
The four updated responses
The appendix in the interagency FAQs contains links to resources, including the agencies’ resources and webinars, the FASB’s Transition Resource Group web page, and the FASB’s Staff Q&A “Topic 326: No. 1: Whether the Weighted-Average Remaining Maturity Method Is an Acceptable Method to Estimate Expected Credit Losses,” issued in January 2019, on the use of the weighted average remaining maturity (WARM) method and illustrative examples of WARM in accordance with CECL.
Refer to BankNet for additional resources, including the OCC’s CECL Call Report Effective Date Decision Tree; the OCC’s CECL Webinar Series; the OCC’s CECL Roadmap: Implementation Considerations; and Topic 12, “Credit Losses,” of the OCC’s Bank Accounting Advisory Series.
Please contact the OCC at CECL@occ.treas.gov with CECL questions. For questions about this bulletin, contact Joy Palmer, Deputy Chief Accountant, or Sarah Nawrocki, Professional Accounting Fellow, Office of the Chief Accountant, at (202) 649-7076.
Grovetta N. Gardineer
Senior Deputy Comptroller for Bank Supervision Policy
1 Refer to OCC Bulletin 2006-47, “Allowance for Loan and Lease Losses (ALLL): Guidance and Frequently Asked Questions (FAQs) on the ALLL.”
2 Refer to OCC Bulletin 2001-37, “Policy Statement on Allowance for Loan and Lease Losses Methodologies and Documentation for Banks and Savings Institutions.”